Affordable Housing Program Amendments: Federal Home Loan Bank Mortgage Refinancing Authority, 61660-61665 [E8-24320]
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Federal Register / Vol. 73, No. 202 / Friday, October 17, 2008 / Rules and Regulations
of the Treasury and General
Government Appropriations Act,
enacted as part of the Omnibus
Consolidated and Emergency
Supplemental Appropriations Act of
1999 (Pub. L. 105–277, 112 Stat. 2681).
The interim rule should have a
positive effect on families by clarifying
the coverage rules for mortgage
servicing accounts, which contain, for
some period of time, the mortgage
payments from borrowers.
VII. Small Business Regulatory
Enforcement Fairness Act
The Office of Management and Budget
has determined that the interim rule is
not a ‘‘major rule’’ within the meaning
of the relevant sections of the Small
Business Regulatory Enforcement Act of
l996 (‘‘SBREFA’’) (5 U.S.C. 801 et seq.).
As required by SBREFA, the FDIC will
file the appropriate reports with
Congress and the General Accounting
Office so that the interim rule may be
reviewed.
List of Subjects in 12 CFR Part 330
Bank deposit insurance, Banks,
banking, Reporting and recordkeeping
requirements, Savings and loan
associations, Trusts and trustees.
■ For the reasons stated above, the
Board of Directors of the Federal
Deposit Insurance Corporation amends
part 330 of chapter III of title 12 of the
Code of Federal Regulations as follows:
PART 330—DEPOSIT INSURANCE
COVERAGE
(d) Mortgage servicing accounts.
Accounts maintained by a mortgage
servicer, in a custodial or other
fiduciary capacity, which are comprised
of payments by mortgagors of principal
and interest, shall be insured for the
cumulative balance paid into the
account by the mortgagors, up to a limit
of the SMDIA per mortgagor. Accounts
maintained by a mortgage servicer, in a
custodial or other fiduciary capacity,
which are comprised of payments by
mortgagors of taxes and insurance
premiums shall be added together and
insured in accordance with paragraph
(a) of this section for the ownership
interest of each mortgagor in such
accounts. This provision is effective as
of October 10, 2008, for all existing and
future mortgage servicing account.
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By order of the Board of Directors.
Dated at Washington DC., this 10th day of
October 2008.
Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary.
[FR Doc. E8–24626 Filed 10–16–08; 8:45 am]
BILLING CODE 6714–01–P
FEDERAL HOUSING FINANCE BOARD
12 CFR Part 951
FEDERAL HOUSING FINANCE
AGENCY
12 CFR Part 1291
1. The authority citation for part 330
continues to read as follows:
■
RIN 2590–AA04
Authority: 12 U.S.C. 1813(l), 1813(m),
1817(i), 1818(q), 1819 (Tenth), 1820(f),
1821(a), 1822(c).
Affordable Housing Program
Amendments: Federal Home Loan
Bank Mortgage Refinancing Authority
2. In § 330.1, paragraph (n) is revised
to read as follows:
■
§ 330.1
Definitions.
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(n) Standard maximum deposit
insurance amount, referred to as the
‘‘SMDIA’’ hereafter, means $250,000
from October 3, 2008, until December
31, 2009. Effective January 1, 2010, the
SMDIA means $100,000 adjusted
pursuant to subparagraph (F) of section
11(a)(1) of the FDI Act (12 U.S.C.
1821(a)(1)(F)). All examples in this part
use $100,000 as the SMDIA.
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■ 3. In § 330.7, paragraph (d) is revised
to read as follows:
§ 330.7 Account held by an agent,
nominee, guardian, custodian or
conservator.
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Federal Housing Finance
Agency.
ACTION: Interim final rule with request
for comments.
AGENCY:
SUMMARY: The Federal Housing Finance
Agency (FHFA) is issuing and seeking
comment on an interim final rule to
implement section 1218 of the Housing
and Economic Recovery Act of 2008
(Recovery Act), which requires the
FHFA to allow the Federal Home Loan
Banks (Banks) until July 30, 2010, to use
Affordable Housing Program (AHP)
homeownership set-aside funds to
refinance low- or moderate-income
households’ mortgage loans. This
rulemaking relocates the AHP regulation
to the FHFA rules, and adds new
provisions that allow the Banks to use
AHP set-aside funds to provide direct
subsidies to low- or moderate-income
households who qualify for refinancing
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assistance under the HOPE for
Homeowners Program established by
the Federal Housing Administration
(FHA) under Title IV of the Recovery
Act.
This interim final rule is
effective October 17, 2008. The FHFA
will accept written comments on the
interim final rule on or before December
16, 2008.
Comments: Submit comments to the
FHFA using any one of the following
methods:
E-mail: comments@fhfb.gov. Please
include RIN 2590–AA04 in the subject
line of the message.
Fax: 202–408–2580.
Mail/Hand Delivery: Federal Housing
Finance Board, 1625 Eye Street, NW.,
Washington, DC 20006, Attention:
Public Comments/RIN 2590–AA04.
Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments. If
you submit your comment to the
Federal eRulemaking Portal, please also
send it by e-mail to the FHFA at
comments@fhfb.gov to ensure timely
receipt by the agency. Include the
following information in the subject line
of your submission: Federal Housing
Finance Agency. Interim Final Rule:
Affordable Housing Program
Amendments: Federal Home Loan Bank
Mortgage Refinancing Authority. RIN
2590–AA04.
We will post all public comments we
receive without change, including any
personal information you provide, such
as your name and address, on the FHFA
Web site at https://www.fhfb.gov/
Default.aspx?Page=93&Top=93.
ADDRESSES:
FOR FURTHER INFORMATION CONTACT:
Sylvia Martinez, Senior Policy Analyst,
202–408–2825, martinezs@fhfb.gov; or
Amy Bogdon, Senior Advisor, 202–408–
2546, bogdona@fhfb.gov. For legal
questions: Sharon B. Like, Senior
Attorney-Advisor, 202–408–2930,
likes@fhfb.gov. You can send regular
mail to the Federal Housing Finance
Board, 1625 Eye Street, NW.,
Washington, DC 20006.
SUPPLEMENTARY INFORMATION:
I. Background
A. Federal Housing Finance Regulatory
Reform Act of 2008
Effective July 30, 2008, Division A of
the Housing and Economic Recovery
Act of 2008, Public Law No. 110–289,
122 Stat. 2654 (2008), titled the Federal
Housing Finance Regulatory Reform Act
of 2008 (Reform Act), created the
Federal Housing Finance Agency
(FHFA) as an independent agency of the
federal government. The Reform Act
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transferred the supervisory and
oversight responsibilities over the
Federal National Mortgage Association
(Fannie Mae), Federal Home Loan
Mortgage Corporation (Freddie Mac)
(collectively, Enterprises), the Federal
Home Loan Banks (Banks), and the Bank
System’s Office of Finance, from the
Office of Federal Housing Enterprise
Oversight (OFHEO) and the Federal
Housing Finance Board (FHFB) to the
FHFA. The Reform Act provides for the
abolishment of OFHEO and the FHFB
one year after the date of enactment.
The FHFA is responsible for ensuring
that the Enterprises and the Banks
operate in a safe and sound manner,
including being capitalized adequately,
and carry out their public policy
missions, including fostering liquid,
efficient, competitive, and resilient
national housing finance markets.
The Enterprises and the Banks
continue to operate under regulations
promulgated by OFHEO and the FHFB
until the FHFA issues its own
regulations.
B. The Banks’ Affordable Housing
Program
Section 10(j) of the Federal Home
Loan Bank Act (Bank Act) requires each
Bank to establish an affordable housing
program, the purpose of which is to
enable a Bank’s members to finance
homeownership by households with
incomes at or below 80 percent of the
area median income (low- or moderateincome households), and to finance the
purchase, construction, or rehabilitation
of rental projects in which at least 20
percent of the units will be occupied by
and affordable for households earning
50 percent or less of the area median
income (very low-income households).
See 12 U.S.C. 1430(j)(1) and (2). The
Bank Act requires each Bank to
contribute 10 percent of its previous
year’s net earnings to its AHP annually,
subject to a minimum annual combined
contribution by the 12 Banks of $100
million. See 12 U.S.C. 1430(j)(5)(C).
Section 1218 of the Reform Act
amended section 10(j) by adding a new
paragraph (2)(C) that requires the FHFA
to allow the Banks until July 30, 2010,
to use AHP homeownership set-aside
funds to refinance low- or moderateincome households’ first mortgage loans
on their primary residences. See 12
U.S.C. 1430(j)(2)(C). The Director of the
FHFA must establish the percentage of
set-aside funds eligible for this use by
regulation.
The FHFB regulation implementing
the AHP provisions of the Bank Act,
previously codified at 12 CFR part 951,
is relocated by this rulemaking to part
1291. The following discussion uses the
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new numbering references. Among
other things,1 the AHP regulation
authorizes a Bank, in its discretion, to
set aside a portion of its annual required
AHP contribution to establish
homeownership set-aside programs for
the purpose of promoting
homeownership for low- or moderateincome households. See 12 CFR 1291.6.
Under the homeownership set-aside
programs, a Bank may provide AHP
direct subsidy (grants) to members to
pay for down payment assistance,
closing costs, and counseling costs in
connection with a household’s purchase
of its primary residence, and for
rehabilitation assistance in connection
with a household’s rehabilitation of an
owner-occupied residence. See 12 CFR
1291.6(c)(4). The AHP regulation does
not authorize the Banks to use AHP setaside funds for refinancing of mortgages.
Currently, a Bank may allocate up to the
greater of $4.5 million or 35 percent of
its annual required AHP contribution to
homeownership set-aside programs in
that year, provided that at least onethird of the Bank’s annual set-aside
allocation is targeted to first-time
homebuyers. See 12 CFR 1291.2(b)(2)(i).
In January 2008, the FHFB waived
certain provisions of the AHP
homeownership set-aside program rule
to allow the Federal Home Loan Bank of
San Francisco (San Francisco Bank) to
establish a temporary pilot program to
provide AHP direct subsidy to enable a
household with a subprime or
nontraditional loan held by a San
Francisco Bank member or its affiliate to
refinance or restructure the loan into an
affordable, long-term fixed-rate
mortgage. See FHFB Resolution 2008–01
(Jan. 15, 2008). The authority will expire
on December 31, 2009. In April 2008,
the FHFB published a proposed rule
that would have temporarily extended
the authority to use set-aside funds for
mortgage refinancing or restructuring to
all of the Banks. See 73 FR 20552 (Apr.
16, 2008). The FHFB received 36
comments on the proposal. Commenters
who supported use of AHP funds for
refinancing suggested flexibility in the
rules governing use of the funds so the
Banks and their members would be able
to assist a greater number of borrowers
in distress, including allowing use of
AHP set-aside funds in conjunction
with other federal, state or local
mortgage refinancing programs.
1 In addition to the discretionary set-aside
authority, the AHP regulation requires that each
Bank establish a competitive application program
under which the Bank’s members may apply for
AHP subsidies pursuant to eligibility requirements
and scoring criteria set forth in the regulation and
implemented through Bank policies. See 12 CFR
1291.5.
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Before the FHFB took final action on
the proposed amendments to the AHP
rule, the Reform Act added section
10(j)(2)(C) to the Bank Act. Title IV of
the Recovery Act also required
establishment by the FHA of the HOPE
for Homeowners Program, a temporary
program expected to be implemented by
October 1, 2008, and which will expire
on September 30, 2011. Participation in
the HOPE for Homeowners Program is
voluntary on the part of homeowners
and existing loan holders. Under the
HOPE for Homeowners Program, FHAapproved lenders may refinance loans
that will qualify for FHA insurance if
the amount of the loan is reduced to no
more than 90 percent of the currently
appraised value of the owner-occupied
property. The FHA insurance premium,
which equals 3 percent of the remaining
principal, is deducted upfront. The
borrower will pay an annual premium
of 1.5 percent of the outstanding
mortgage amount.
The purpose of the HOPE for
Homeowners Program, like that of the
Banks’ refinancing authority under the
AHP, is to assist distressed homeowners
and support long-term affordable
homeownership. The FHFA believes
that use of AHP subsidy in conjunction
with the HOPE for Homeowners
Program will leverage and enhance the
effectiveness of each program, ensure
that the full range of federal assistance
to affected homeowners is available
quickly, and provide the flexibility that
the Banks and their members need to
make the AHP refinancing program
successful. In adopting this approach,
the FHFA has consulted with the FHA.
Linking the use of the AHP subsidy to
refinancing under the HOPE for
Homeowners Program also would be
consistent with the requirement in
section 10(j)(9)(G) of the Bank Act that
the AHP rule coordinate AHP activities
with other federal or federallysubsidized affordable housing activities
to the maximum extent possible. See 12
U.S.C. 1430(j)(9)(G). Accordingly, this
interim final rule authorizes a Bank, in
its discretion, to temporarily establish a
homeownership set-aside program for
the use of AHP direct subsidy by its
members to assist in the refinancing of
a household’s mortgage loan under the
FHA’s HOPE for Homeowners Program.
Section 1201 of the Reform Act
requires the Director of the FHFA to
consider the differences between the
Banks and the Enterprises in
rulemakings that affect the Banks with
respect to the Banks’ cooperative
ownership structure, mission of
providing liquidity to members,
affordable housing and community
development mission, capital structure,
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and joint and several liability. 12 U.S.C.
4513(f). In preparing the interim final
rule, the Director considered these
factors and determined that the rule is
appropriate, particularly because the
AHP regulation implements a statutory
provision of the Bank Act that applies
only to the Banks. See 12 U.S.C. 1430(j).
II. Analysis of the Interim Final Rule
A. Relocation of AHP Rule to Part 1291
The interim final rule relocates the
AHP rule from part 951 of the FHFB
regulations to part 1291 of the FHFA
regulations, and renames the new part
to read ‘‘Federal Home Loan Banks’
Affordable Housing Program’’. The rule
also renumbers references within the
rule to reflect its new part number.
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B. Authority To Establish Mortgage
Refinancing Program: § 1291.6(f)(1)
The interim final rule adds a new
paragraph (f) under the existing AHP
homeownership set-aside program
provisions of § 1291.6 of the AHP
regulation, that authorizes a Bank, in its
discretion, to temporarily establish a
homeownership set-aside program for
the use of AHP direct subsidy by its
members to assist in the refinancing of
a household’s mortgage loan under
FHA’s HOPE for Homeowners Program.
12 CFR 1291.6(f). As a general
proposition, any such new refinancing
program must comply with the existing
requirements in § 1291.6, except for
certain specified provisions, as well as
with the requirements of part 1291.
Thus, the existing provisions in § 1291.6
governing eligible member applicants,
member allocation criteria, household
income eligibility, maximum subsidy
per household limit of $15,000, de
minimis cash backs, application
approvals, funding procedures,
reservation of subsidies, and progress
towards use of the subsidy, all apply to
a Bank’s mortgage refinancing program.
See 12 CFR 1291.6(b), (c)(1), (c)(2)(i),
(c)(3), (c)(9), (d), (e). Similarly, a Bank’s
mortgage refinancing program must
otherwise meet the requirements of part
1291, including the monitoring,
remedial actions for member
noncompliance, and agreements
provisions in §§ 1291.7, 1291.8, and
1291.9, respectively, other than the
requirement in § 1291.9(a)(7) for fiveyear retention agreements in connection
with a household’s subsequent sale or
refinancing of the unit.
The interim final rule provides that
the provisions in § 1291.6 governing
household completion of a counseling
program, first-time homebuyer and
additional discretionary household
eligibility criteria, eligible uses of AHP
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subsidy, five-year retention agreements,
lender financial or other concessions,
loan financing costs, and counseling
costs requirements, all do not apply to
the new refinancing programs. See 12
CFR 1291.6(c)(2)(ii), (c)(2)(iii), (c)(4)–
(c)(8).
C. Funding Allocation: § 1291.2(b)(2)(i)
In order to maximize the Banks’ role
in responding to the current national
mortgage crisis, the interim final rule
allows a Bank to allocate the maximum
permissible homeownership set-aside
allocation entirely to a mortgage
refinancing program established under
new paragraph (f). See 12 CFR
1291.2(b)(2)(i). The interim final rule
further provides that if a Bank sets aside
funds solely for homeownership setaside programs other than a mortgage
refinancing program established under
paragraph (f), at least one-third of the
Bank’s aggregate annual set-aside
allocation to such programs shall be to
assist first-time homebuyers. This is
consistent with the current one-third
first-time homebuyers requirement.
D. Eligible Loans: § 1291.6(f)(2)
Under the interim final rule, a loan is
eligible to be refinanced with AHP
direct subsidy if the loan is secured by
a first mortgage on an owner-occupied
unit that is the primary residence of the
household, and the loan is refinanced
under the HOPE for Homeowners
Program. 12 CFR 1291.6(f)(2). In order to
be refinanced under the HOPE for
Homeowners Program, the loan must
meet all applicable underwriting
requirements and other FHA standards
for the HOPE for Homeowners Program.
The FHFA believes that these
requirements and standards will
provide both adequate protections to
borrowers whose loans will be
refinanced and protect the integrity of
the AHP. For example, under the HOPE
for Homeowners Program and FHA
standards:
• The borrower must be unable to
afford its existing mortgage payments;
the borrower’s mortgage debt-to-income
ratio, as of March 1, 2008, must have
been greater than 31 percent, or such
higher amount as the FHA determines
appropriate;
• The principal amount of the
refinanced loan shall not exceed 90
percent of the currently appraised value
of the property;
• The refinanced loan must be a
fixed-rate, fully amortizing, 30-year
loan;
• Prepayment fees must be waived;
• All fees and penalties related to
default or delinquency on the original
mortgage must be waived or forgiven;
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• Any outstanding mortgage liens on
the property shall be removed;
• Investor-owned properties are not
eligible—the borrower must be an
owner-occupant;
• The borrower must have verified
income based on an IRS tax return or
other equivalent standards;
• The borrower may be charged only
reasonable and customary closing costs
established by the FHA;
• Origination fees are subject to
limitation; and
• Rates on refinanced mortgages must
be commensurate with market interest
rates.
There are other programs that provide
refinancing assistance to distressed
borrowers. The Enterprises offer
programs that allow for loan
modifications targeted at subprime
mortgage borrowers but which do not
require that lenders take an initial writedown based on the current appraised
value. The FHA offers a refinancing
option in addition to the HOPE for
Homeowners Program called FHA
Secure. Under FHA Secure, any
mortgage payment arrearage on the first
loan can be rolled into a new FHAinsured loan. Further, lenders have the
option of placing a second lien on the
property if the borrower owes more than
the property is worth or exceeds the
FHA loan limit or to cover prepayment
penalties and arrearages. In addition,
state housing finance agencies are
developing their own refinancing
programs to assist distressed
homeowners. Because these programs
are diverse and emerging, the FHFA has
not analyzed their specific merits.
The FHFA requests comment on
whether the rule should authorize the
Banks to use AHP set-aside funds to
assist homeowners refinancing under
other programs intended to aid
distressed homeowners, such as those
offered by the Enterprises, FHA Secure,
or any state housing finance agency
programs. In addition, the FHFA
requests comment on how the standards
for these programs will assure the
affordability of the housing costs to the
borrower and the sustainability of the
refinanced loan.
E. Eligible Uses of AHP Subsidy:
§ 1291.6(f)(3)
The interim final rule allows members
to provide AHP direct subsidy for two
uses. 12 CFR 1291.6(f)(3). A member
may use the subsidy to reduce the
outstanding principal balance of the
household’s loan below the maximum
loan-to-value ratio required under the
HOPE for Homeowners Program in
order to enable the household to meet
the applicable mortgage debt-to-income
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ratio requirements under such Program,
i.e., to make the refinanced loan
affordable to the household. This use of
the AHP subsidy is consistent with the
current AHP rule, which permits use of
the AHP subsidy to pay for down
payment assistance in connection with
the purchase of a home under the
homeownership set-aside program. See
12 CFR 1291.6(c)(4). In addition, under
the new AHP refinancing authority, a
member may use the AHP subsidy to
pay FHA-approved loan closing costs.
This use of AHP subsidy also is
consistent with the current AHP rule,
which permits use of the AHP subsidy
to pay for closing costs in connection
with the purchase of a home under the
homeownership set-aside program. See
12 CFR 1291.6(c)(4) and (8).
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F. Eligible Lender Participants:
§ 1291.6(f)(4)
Under the interim final rule, a Bank
may provide the AHP direct subsidy to
members that are FHA-approved lenders
for the purpose of refinancing an
eligible loan with an FHA-insured loan
by the member. A Bank may also, in its
discretion, provide the AHP subsidy to
members that will provide the subsidy
to FHA-approved lenders that are not
members of the Bank for the purpose of
refinancing an eligible loan if, after
consulting with the Bank’s Advisory
Council, the Bank determines that such
action would be in the best interests of
borrowers in the Bank’s district. 12 CFR
1291.6(f)(4). Providing the subsidy to
members, or to members who provide it
to nonmembers, is consistent with the
current AHP homeownership set-aside
process under which a Bank provides
the AHP subsidy to a member for use in
conjunction with making a loan to a
borrower, or to a member that provides
the subsidy to another member or
nonmember lender to make an AHPassisted loan to a borrower.
G. AHP Retention Agreements
The interim final rule does not require
five-year retention agreements as
required under the current AHP
regulation and, therefore, does not
require repayment of AHP subsidy by a
household in the event of a subsequent
sale or refinancing of the unit during the
five-year retention period. See 12 CFR
1291.6(c)(5) and 1291.9(a)(7). The FHFA
has decided not to include this
requirement because the HOPE for
Homeowners Program includes a
requirement generally that any
appreciation or equity created as a result
of a sale or refinancing during the fiveyear period must be shared between the
FHA, the borrower, and any subordinate
mortgage holder whose lien was
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extinguished as part of the refinancing
under the Program. See Reform Act at
sec. 1402(a) (National Housing Act sec.
257(e)(4)(B), and (k)).
H. Monitoring: § 1291.7(b)
The interim final rule amends existing
§ 1291.7(b), which sets forth the
monitoring requirements for
homeownership set-aside programs
generally, to make a Bank’s mortgage
refinancing program subject to those
monitoring requirements. Thus, a
Bank’s written monitoring policies for
its homeownership set-aside programs
must include requirements for: (i)
Determining whether AHP subsidy was
provided to households with incomes at
or below 80 percent of the area median
income as required in § 1291.6(c)(2)(i),
and all other applicable eligibility
requirements in § 1291.6(c) and (f); (ii)
Bank review of member certifications,
prior to disbursement of the AHP
subsidy, that the subsidy will be
provided in compliance with all
applicable eligibility requirements in
§ 1291.6(c) and (f); and (iii) Bank review
of back-up documentation regarding
household incomes maintained by the
member, and maintenance and Bank
review of other documentation in the
Bank’s discretion.
I. Sunset Date: § 1291.6(f)(5)
The interim final rule includes a
provision terminating the Banks’
authority to commit AHP subsidy for
refinancing after July 30, 2010, which is
the expiration date of the two-year
period in section 1218 of the Reform
Act. 12 CFR 1291.6(f)(5). The rule
allows lenders to use AHP subsidy
committed by that date to refinance
loans that are in the pipeline. This
means that a lender may use the AHP
subsidy for a loan that was submitted to
the FHA for approval on or before July
30, 2010 that is approved for refinancing
under the HOPE for Homeowners
Program after that date. Title IV of the
Reform Act provides that the sunset
date for the HOPE for Homeowners
Program is September 30, 2011. See
Reform Act at sec. 1402(a) (National
Housing Act sec. 257(r)). In light of our
view that prior to its amendment by the
Reform Act, section 10(j) of the Bank
Act provided the legal authority for the
FHFA to permit the Banks to use AHP
subsidy to pay costs associated with
refinancing existing mortgage loans, see
73 FR at 20553–55, the FHFA requests
comment on whether it should extend
the sunset date to be co-extensive with
that of the HOPE for Homeowners
Program.
The FHFA invites comments on all
aspects of the interim final rule.
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III. Notice and Public Participation
The FHFA for good cause finds that
the notice and comment procedure
required by the Administrative
Procedure Act is impracticable or
contrary to the public interest in this
instance. See 5 U.S.C. 553(b)(3)(B).
Section 1218 of the Reform Act requires
that the FHFA’s regulations authorize
the use of AHP subsidy for mortgage
refinancing for a two-year period
commencing on July 30, 2008. Issuance
of an interim final rule will enable the
Banks to expedite implementation of
AHP mortgage refinancing programs
pursuant to section 1218. The delay that
would ensue during a proposed notice
and comment rulemaking would
significantly curtail the available period
of time for implementation and
operation of AHP mortgage refinancing
programs by the Banks. However,
because the FHFA believes that public
comments are valuable, it encourages
comments on this interim final rule, and
will consider all comments received on
or before December 16, 2008 in
promulgating a final rule.
IV. Effective Date
For the reasons stated in part III
above, the FHFA for good cause finds
that the interim final rule should
become effective on October 17, 2008.
See 5 U.S.C. 553(d)(3).
V. Paperwork Reduction Act
The information collection contained
in the current AHP regulation, entitled
‘‘Affordable Housing Program (AHP),’’
has been assigned control number 3069–
0006 by the Office of Management and
Budget (OMB). The interim final rule
does not substantively or materially
modify the approved information
collection. Consequently, the FHFA has
not submitted any information to OMB
for review under the Paperwork
Reduction Act of 1995 (PRA). See 44
U.S.C. 3501 et seq.
VI. Regulatory Flexibility Act
The FHFA is adopting this regulation
in the form of an interim final rule and
not as a proposed rule. Therefore, the
provisions of the Regulatory Flexibility
Act do not apply. See 5 U.S.C. 601(2)
and 603(a).
List of Subjects in 12 CFR Parts 951 and
1291
Community development, Credit,
Federal home loan banks, Housing,
Reporting and recordkeeping
requirements.
For the reasons stated in the preamble,
the FHFA hereby amends chapters IX
■
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Federal Register / Vol. 73, No. 202 / Friday, October 17, 2008 / Rules and Regulations
and XII of title 12 of the Code of Federal
Regulations as follows:
CHAPTER XII—FEDERAL HOUSING
FINANCE AGENCY
1. Amend title 12 CFR chapter XII by
establishing subchapter E, consisting of
parts 1280 through 1299, to read as
follows:
■
Subchapter E—Housing Goals and Mission
CHAPTER IX—FEDERAL HOUSING
FINANCE BOARD
PART 951—AFFORDABLE HOUSING
PROGRAM
2. Transfer 12 CFR part 951 from
chapter IX, subchapter G, to chapter XII,
subchapter E and redesignate as 12 CFR
part 1291.
PART 1291—FEDERAL HOME LOAN
BANKS’ AFFORDABLE HOUSING
PROGRAM
3. The authority citation for the newly
redesignated part 1291 continues to read
as follows:
■
■
Authority: 12 U.S.C. 1430(j).
3A. Revise the heading of newly
redesignated part 1291 to read as set
forth above.
■ 4. Amend the newly redesignated part
1291 as follows:
■
Amend:
By removing the reference to:
And adding in its place:
§ 1291.1, definition of ‘‘Affordable’’ ...........................
§ 1291.1, definition of ‘‘Competitive application program’’.
§ 1291.1, definition of ‘‘Homeownership set-aside
program’’.
§ 1291.3(a)(1) ............................................................
§ 1291.3(a)(2) ............................................................
§ 1291.3(a)(3) ............................................................
§ 1291.3(a)(4) ............................................................
§ 1291.3(a)(5) ............................................................
§ 1291.3(a)(6) ............................................................
§ 1291.3(a)(7) ............................................................
§ 1291.3(a)(8) ............................................................
§ 1291.5(c)(9)(i) .........................................................
§ 1291.5(c)(9)(ii) ........................................................
§ 1291.5(c)(10)(ii) ......................................................
§ 1291.5(c)(10)(iii) .....................................................
§ 1291.5(c)(13)(iii)(A) ................................................
§ 1291.5(c)(13)(iii)(B) ................................................
§ 1291.5(c)(14)(iii) .....................................................
§ 951.1 of this part ...................................................
§ 951.5 of this part ...................................................
§ 1291.1.
§ 1291.5.
§ 951.6 of this part ...................................................
§ 1291.6.
§ 951.1 of this part ...................................................
§ 951.5 of this part ...................................................
§ 951.6 of this part ...................................................
§ 951.5(c)(13) of this part .........................................
§ 951.5(c)(14) of this part .........................................
§ 951.7 of this part ...................................................
§ 951.8(f)(2) of this part ...........................................
§ 951.9(a)(7) and (a)(8) of this part .........................
§ 951.9(a)(7) of this part ..........................................
§ 951.9(a)(8) of this part ..........................................
§ 951.5(c)(13) of this part .........................................
§ 951.5(c)(14) of this part .........................................
§§ 951.7(a) and 951.9 of this part ...........................
§§ 951.8 and 951.9 of this part ................................
§ 951.7(a), 951.8, and 951.9, respectively, of this
part.
§ 951.5(f) of this part ................................................
§ 951.8(f)(2) of this part ...........................................
§ 951.3 of this part ...................................................
§ 951.5(e) of this part ...............................................
§ 951.2(b)(2) of this part ..........................................
§ 951.9(a)(7) of this part ..........................................
§ 951.9(a)(7) or (a)(8), respectively, of this part ......
§ 951.1 of this part ...................................................
§ 951.6(c)(2) of this part ...........................................
§ 951.6(c) of this part ...............................................
§ 951.6(c)(5) of this part ...........................................
§ 951.6(c) of this part ...............................................
§ 951.5(f) of this part ................................................
§ 907.9 of this chapter .............................................
§ 951.8(b)(1) of this part ..........................................
§ 951.8(b)(2)(i) or (b)(2)(ii) of this part .....................
§ 951.8(b)(2)(i) of this part .......................................
§ 951.7 of this part ...................................................
§ 951.7 of this part ...................................................
§ 951.8(f)(2) of this part ...........................................
§ 951.8(f)(2) ..............................................................
§ 951.5(c)(13) of this part .........................................
§ 951.8(b)(2)(ii) of this part ......................................
§ 951.2(a) of this part ...............................................
§ 951.2(a) of this part ...............................................
§ 951.2(a) of this part ...............................................
§ 1291.1.
§ 1291.5.
§ 1291.6.
§ 1291.5(c)(13).
§ 1291.5(c)(14).
§ 1291.7.
§ 1291.8(f)(2).
§ 1291.9(a)(7) and (8).
§ 1291.9(a)(7).
§ 1291.9(a)(8).
paragraph (c)(13) of this section.
paragraph (c)(14) of this section.
§§ 1291.7(a) and 1291.9.
§§ 1291.8 and 1291.9.
§§ 1291.7(a), 1291.8, and 1291.9.
§ 1291.5(c)(16)(i)(A) ..................................................
§ 1291.5(g)(6) ............................................................
§ 1291.5(h)(1)(i) ........................................................
§ 1291.5(h)(1)(ii) ........................................................
§ 1291.6(c)(2)(iii) .......................................................
§ 1291.6(c)(5) ............................................................
§ 1291.7(a)(1)(i)(C)(4) ...............................................
§ 1291.7(a)(5) ............................................................
§ 1291.7(b)(1)(i) ........................................................
§ 1291.7(b)(1)(ii) ........................................................
§ 1291.7(b)(1)(ii) ........................................................
§ 1291.7(b)(2)(i) ........................................................
§ 1291.8(c)(2) ............................................................
§ 1291.8(i) .................................................................
§ 1291.9(a)(4)(i) ........................................................
§ 1291.9(a)(4)(ii)(A) ...................................................
§ 1291.9(a)(4)(ii)(B) ...................................................
§ 1291.9(a)(5)(i) ........................................................
§ 1291.9(a)(5)(ii) ........................................................
§ 1291.9(a)(7)(iii)(A) ..................................................
§ 1291.9(a)(7)(iii)(B) ..................................................
§ 1291.9(a)(9) ............................................................
§ 1291.9(b) ................................................................
§ 1291.11(a) ..............................................................
§ 1291.12(a) ..............................................................
§ 1291.12(b) ..............................................................
5. In newly redesignated part 1291,
revise all references to ‘‘Finance Board’’
to read ‘‘FHFA’’.
jlentini on PROD1PC65 with RULES
■
6. In newly redesignated § 1291.1, add
the following definitions in alphabetical
order:
■
VerDate Aug<31>2005
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§ 1291.1
Definitions.
*
*
*
*
*
Director means the Director of the
Federal Housing Finance Agency, or his
or her designate.
*
*
*
*
*
PO 00000
Frm 00008
Fmt 4700
Sfmt 4700
paragraph (f) of this section.
§ 1291.8(f)(2).
§ 1291.3.
paragraph (e) of this section.
§ 1291.2(b)(2).
§ 1291.9(a)(7).
§ 1291.9(a)(7) or (8).
§ 1291.1.
§ 1291.6(c)(2).
§ 1291.6(c).
§ 1291.6(c)(5).
§ 1291.6(c).
§ 1291.5(f).
12 CFR 907.9.
§ 1291.8(b)(1).
§ 1291.8(b)(2)(i) or (ii).
§ 1291.8(b)(2)(i).
§ 1291.7.
§ 1291.7.
§ 1291.8(f)(2).
§ 1291.8(f)(2).
§ 1291.5(c)(13).
§ 1291.8(b)(2)(ii).
§ 1291.2(a).
§ 1291.2(a).
§ 1291.2(a).
FHFA means the Federal Housing
Finance Agency.
*
*
*
*
*
7. Amend § 1291.2(b)(2)(i) to read as
follows:
■
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Federal Register / Vol. 73, No. 202 / Friday, October 17, 2008 / Rules and Regulations
§ 1291.2 Required annual AHP
contributions; allocation of contributions.
*
*
*
*
*
(b) * * *
(2) Homeownership set-aside
programs—(i) Allocation amount; firsttime homebuyers. (A) A Bank, in its
discretion, may set aside annually, in
the aggregate, up to the greater of $4.5
million or 35 percent of the Bank’s
annual required AHP contribution to
provide funds to members participating
in homeownership set-aside programs,
including a mortgage refinancing setaside program established under
paragraph (f) of this section, pursuant to
the requirements of this part.
(B) If a Bank sets aside funds solely
for homeownership set-aside programs
other than a mortgage refinancing
program established under paragraph (f)
of this section, at least one-third of the
Bank’s aggregate annual set-aside
allocation to such programs shall be to
assist first-time homebuyers.
*
*
*
*
*
■ 8. Amend § 1291.6 by adding
paragraph (f) to read as follows:
§ 1291.6 Homeownership set-aside
programs.
jlentini on PROD1PC65 with RULES
*
*
*
*
*
(f) Mortgage refinancing program—(1)
General. A Bank may establish a
homeownership set-aside program for
the use of AHP direct subsidy by its
members to assist in the refinancing of
a household’s mortgage loan, provided
such program meets the requirements of
this paragraph (f) and otherwise meets
the requirements of part 1291. The
provisions of paragraphs (c)(2)(ii),
(c)(2)(iii), and (c)(4) through (c)(8) of
this section, shall not apply to such
program.
(2) Eligible loans. A loan is eligible to
be refinanced with AHP direct subsidy
if the loan is secured by a first mortgage
on an owner-occupied unit that is the
primary residence of the household, and
the loan is refinanced under the Federal
Housing Administration’s (FHA) HOPE
for Homeowners Program established
pursuant to Title IV of the Housing and
Economic Recovery Act of 2008 and
thereby meets all applicable
underwriting requirements and other
standards under Title II of the National
Housing Act, as amended by Title IV (12
U.S.C. 1707 et seq.).
(3) Eligible uses of AHP direct
subsidy. Members may provide the AHP
direct subsidy to:
(i) Reduce the outstanding principal
balance of the loan below the maximum
loan-to-value ratio required under the
HOPE for Homeowners Program in
order to make the refinanced loan
affordable to the household by enabling
VerDate Aug<31>2005
17:16 Oct 16, 2008
Jkt 217001
the household to meet the HOPE for
Homeowners Program’s debt-to-income
standards for a low-or moderate-income
household; or
(ii) Pay FHA-approved loan closing
costs.
(4) Eligible lender participants. A
Bank may provide the AHP direct
subsidy to members that are FHAapproved lenders for the purpose of
refinancing an eligible loan with an
FHA-insured loan by the member, or, in
the Bank’s discretion, to members that
provide the subsidy to FHA-approved
lenders that are not members of the
Bank for the purpose of refinancing an
eligible loan if, after consulting with the
Bank’s Advisory Council, the Bank
determines that such action would be in
the best interests of borrowers in the
Bank’s district.
(5) Sunset. (i) This paragraph (f) shall
expire on July 30, 2010, and a Bank may
not commit AHP subsidy to households
under its refinancing program after such
date.
(ii) A lender may use the AHP subsidy
committed by such date for a loan
submitted to the FHA for approval on or
before July 30, 2010 that is approved for
refinancing under the HOPE for
Homeowners Program after such date.
■ 9. Amend § 1291.7 by:
■ a. In paragraph (b)(1)(ii), adding ‘‘and
§ 1291.6(f)’’ after ‘‘§ 1291.6(c)’’; and
■ b. In paragraph (b)(2)(i), adding ‘‘and
§ 1291.6(f)’’ after ‘‘§ 1291.6(c)’’.
■ 10. In newly redesignated § 1291.11,
revise all references to ‘‘Board of
Directors’’ to read ‘‘Director’’.
Dated: October 7, 2008.
James B. Lockhart III,
Director, Federal Housing Finance Agency.
[FR Doc. E8–24320 Filed 10–16–08; 8:45 am]
BILLING CODE 8070–01–P
SMALL BUSINESS ADMINISTRATION
13 CFR Part 101
RIN 3245–AF75
Small Business Energy Efficiency
Program
Small Business Administration.
Direct final rule; comment
AGENCY:
ACTION:
request.
SUMMARY: The U.S. Small Business
Administration (SBA or Administration)
is establishing a government-wide
program that builds on the Energy Star
for Small Business Program, and is
located at https://www.sba.gov/energy.
This rule is promulgated to comply with
a provision of the Energy Independence
and Security Act of 2007.
PO 00000
Frm 00009
Fmt 4700
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61665
This rule is effective December 1,
2008, without further action, unless
SBA receives a significant adverse
comment by November 17, 2008. If SBA
receives any significant adverse
comments, SBA will publish a timely
withdrawal of this rule in the Federal
Register.
ADDRESSES: You may submit comments,
identified by RIN: 3245–AF75, by any of
the following methods:
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting documents.
• Mail, for paper, disk, or CD–ROM
submissions: Kathryn Holt, Analyst,
Office of Policy and Strategic Planning,
Office of the Administrator, 409 Third
Street, SW., Mail Code 2150,
Washington, DC 20416.
• Hand Delivery/Courier: Kathryn
Holt, Analyst, Office of Policy and
Strategic Planning, Office of the
Administrator, 409 Third Street, SW.,
Mail Stop 2150, Washington, DC 20416.
SBA will post all comments on
https://www.regulations.gov. If you wish
to submit confidential business
information (CBI) as defined in the User
Notice at https://www.regulations.gov,
please submit the information to
Kathryn Holt, Analyst, Office of Policy
and Strategic Planning, Office of the
Administrator, 409 Third Street, SW.,
Mail Stop 2150, Washington, DC 20416,
or send an e-mail to
kathryn.holt@sba.gov. Highlight the
information that you consider to be CBI
and explain why you believe SBA
should hold this information as
confidential. SBA will review the
information and make its final
determination of whether it will publish
the information or not.
FOR FURTHER INFORMATION CONTACT:
Kathryn Holt, Analyst, Office of Policy
and Strategic Planning, Office of the
Administrator, 409 Third Street, SW.,
Mail Stop 2150, Washington, DC 20416
or kathryn.holt@sba.gov.
SUPPLEMENTARY INFORMATION: The
Administration has developed and
coordinated a Government-wide
program, building on the Energy Star for
Small Business Program, to assist small
business concerns in: Becoming more
energy efficient, understanding the cost
savings from improved energy
efficiency, and identifying financing
options for energy efficiency upgrades.
This rule is promulgated to comply with
the Energy Independence and Security
Act of 2007, § 1203(b). (15 U.S.C. 657h).
The program was developed and
coordinated in consultation with the
Secretary of the Department of Energy
and the Administrator of the
Environmental Protection Agency, and
DATES:
E:\FR\FM\17OCR1.SGM
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]]>Agencies
[Federal Register Volume 73, Number 202 (Friday, October 17, 2008)]
[Rules and Regulations]
[Pages 61660-61665]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-24320]
=======================================================================
-----------------------------------------------------------------------
FEDERAL HOUSING FINANCE BOARD
12 CFR Part 951
FEDERAL HOUSING FINANCE AGENCY
12 CFR Part 1291
RIN 2590-AA04
Affordable Housing Program Amendments: Federal Home Loan Bank
Mortgage Refinancing Authority
AGENCY: Federal Housing Finance Agency.
ACTION: Interim final rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: The Federal Housing Finance Agency (FHFA) is issuing and
seeking comment on an interim final rule to implement section 1218 of
the Housing and Economic Recovery Act of 2008 (Recovery Act), which
requires the FHFA to allow the Federal Home Loan Banks (Banks) until
July 30, 2010, to use Affordable Housing Program (AHP) homeownership
set-aside funds to refinance low- or moderate-income households'
mortgage loans. This rulemaking relocates the AHP regulation to the
FHFA rules, and adds new provisions that allow the Banks to use AHP
set-aside funds to provide direct subsidies to low- or moderate-income
households who qualify for refinancing assistance under the HOPE for
Homeowners Program established by the Federal Housing Administration
(FHA) under Title IV of the Recovery Act.
ADDRESSES: This interim final rule is effective October 17, 2008. The
FHFA will accept written comments on the interim final rule on or
before December 16, 2008.
Comments: Submit comments to the FHFA using any one of the
following methods:
E-mail: comments@fhfb.gov. Please include RIN 2590-AA04 in the
subject line of the message.
Fax: 202-408-2580.
Mail/Hand Delivery: Federal Housing Finance Board, 1625 Eye Street,
NW., Washington, DC 20006, Attention: Public Comments/RIN 2590-AA04.
Federal eRulemaking Portal: https://www.regulations.gov. Follow the
instructions for submitting comments. If you submit your comment to the
Federal eRulemaking Portal, please also send it by e-mail to the FHFA
at comments@fhfb.gov to ensure timely receipt by the agency. Include
the following information in the subject line of your submission:
Federal Housing Finance Agency. Interim Final Rule: Affordable Housing
Program Amendments: Federal Home Loan Bank Mortgage Refinancing
Authority. RIN 2590-AA04.
We will post all public comments we receive without change,
including any personal information you provide, such as your name and
address, on the FHFA Web site at https://www.fhfb.gov/
Default.aspx?Page=93&Top=93.
FOR FURTHER INFORMATION CONTACT: Sylvia Martinez, Senior Policy
Analyst, 202-408-2825, martinezs@fhfb.gov; or Amy Bogdon, Senior
Advisor, 202-408-2546, bogdona@fhfb.gov. For legal questions: Sharon B.
Like, Senior Attorney-Advisor, 202-408-2930, likes@fhfb.gov. You can
send regular mail to the Federal Housing Finance Board, 1625 Eye
Street, NW., Washington, DC 20006.
SUPPLEMENTARY INFORMATION:
I. Background
A. Federal Housing Finance Regulatory Reform Act of 2008
Effective July 30, 2008, Division A of the Housing and Economic
Recovery Act of 2008, Public Law No. 110-289, 122 Stat. 2654 (2008),
titled the Federal Housing Finance Regulatory Reform Act of 2008
(Reform Act), created the Federal Housing Finance Agency (FHFA) as an
independent agency of the federal government. The Reform Act
[[Page 61661]]
transferred the supervisory and oversight responsibilities over the
Federal National Mortgage Association (Fannie Mae), Federal Home Loan
Mortgage Corporation (Freddie Mac) (collectively, Enterprises), the
Federal Home Loan Banks (Banks), and the Bank System's Office of
Finance, from the Office of Federal Housing Enterprise Oversight
(OFHEO) and the Federal Housing Finance Board (FHFB) to the FHFA. The
Reform Act provides for the abolishment of OFHEO and the FHFB one year
after the date of enactment. The FHFA is responsible for ensuring that
the Enterprises and the Banks operate in a safe and sound manner,
including being capitalized adequately, and carry out their public
policy missions, including fostering liquid, efficient, competitive,
and resilient national housing finance markets.
The Enterprises and the Banks continue to operate under regulations
promulgated by OFHEO and the FHFB until the FHFA issues its own
regulations.
B. The Banks' Affordable Housing Program
Section 10(j) of the Federal Home Loan Bank Act (Bank Act) requires
each Bank to establish an affordable housing program, the purpose of
which is to enable a Bank's members to finance homeownership by
households with incomes at or below 80 percent of the area median
income (low- or moderate-income households), and to finance the
purchase, construction, or rehabilitation of rental projects in which
at least 20 percent of the units will be occupied by and affordable for
households earning 50 percent or less of the area median income (very
low-income households). See 12 U.S.C. 1430(j)(1) and (2). The Bank Act
requires each Bank to contribute 10 percent of its previous year's net
earnings to its AHP annually, subject to a minimum annual combined
contribution by the 12 Banks of $100 million. See 12 U.S.C.
1430(j)(5)(C). Section 1218 of the Reform Act amended section 10(j) by
adding a new paragraph (2)(C) that requires the FHFA to allow the Banks
until July 30, 2010, to use AHP homeownership set-aside funds to
refinance low- or moderate-income households' first mortgage loans on
their primary residences. See 12 U.S.C. 1430(j)(2)(C). The Director of
the FHFA must establish the percentage of set-aside funds eligible for
this use by regulation.
The FHFB regulation implementing the AHP provisions of the Bank
Act, previously codified at 12 CFR part 951, is relocated by this
rulemaking to part 1291. The following discussion uses the new
numbering references. Among other things,\1\ the AHP regulation
authorizes a Bank, in its discretion, to set aside a portion of its
annual required AHP contribution to establish homeownership set-aside
programs for the purpose of promoting homeownership for low- or
moderate-income households. See 12 CFR 1291.6. Under the homeownership
set-aside programs, a Bank may provide AHP direct subsidy (grants) to
members to pay for down payment assistance, closing costs, and
counseling costs in connection with a household's purchase of its
primary residence, and for rehabilitation assistance in connection with
a household's rehabilitation of an owner-occupied residence. See 12 CFR
1291.6(c)(4). The AHP regulation does not authorize the Banks to use
AHP set-aside funds for refinancing of mortgages. Currently, a Bank may
allocate up to the greater of $4.5 million or 35 percent of its annual
required AHP contribution to homeownership set-aside programs in that
year, provided that at least one-third of the Bank's annual set-aside
allocation is targeted to first-time homebuyers. See 12 CFR
1291.2(b)(2)(i).
---------------------------------------------------------------------------
\1\ In addition to the discretionary set-aside authority, the
AHP regulation requires that each Bank establish a competitive
application program under which the Bank's members may apply for AHP
subsidies pursuant to eligibility requirements and scoring criteria
set forth in the regulation and implemented through Bank policies.
See 12 CFR 1291.5.
---------------------------------------------------------------------------
In January 2008, the FHFB waived certain provisions of the AHP
homeownership set-aside program rule to allow the Federal Home Loan
Bank of San Francisco (San Francisco Bank) to establish a temporary
pilot program to provide AHP direct subsidy to enable a household with
a subprime or nontraditional loan held by a San Francisco Bank member
or its affiliate to refinance or restructure the loan into an
affordable, long-term fixed-rate mortgage. See FHFB Resolution 2008-01
(Jan. 15, 2008). The authority will expire on December 31, 2009. In
April 2008, the FHFB published a proposed rule that would have
temporarily extended the authority to use set-aside funds for mortgage
refinancing or restructuring to all of the Banks. See 73 FR 20552 (Apr.
16, 2008). The FHFB received 36 comments on the proposal. Commenters
who supported use of AHP funds for refinancing suggested flexibility in
the rules governing use of the funds so the Banks and their members
would be able to assist a greater number of borrowers in distress,
including allowing use of AHP set-aside funds in conjunction with other
federal, state or local mortgage refinancing programs.
Before the FHFB took final action on the proposed amendments to the
AHP rule, the Reform Act added section 10(j)(2)(C) to the Bank Act.
Title IV of the Recovery Act also required establishment by the FHA of
the HOPE for Homeowners Program, a temporary program expected to be
implemented by October 1, 2008, and which will expire on September 30,
2011. Participation in the HOPE for Homeowners Program is voluntary on
the part of homeowners and existing loan holders. Under the HOPE for
Homeowners Program, FHA-approved lenders may refinance loans that will
qualify for FHA insurance if the amount of the loan is reduced to no
more than 90 percent of the currently appraised value of the owner-
occupied property. The FHA insurance premium, which equals 3 percent of
the remaining principal, is deducted upfront. The borrower will pay an
annual premium of 1.5 percent of the outstanding mortgage amount.
The purpose of the HOPE for Homeowners Program, like that of the
Banks' refinancing authority under the AHP, is to assist distressed
homeowners and support long-term affordable homeownership. The FHFA
believes that use of AHP subsidy in conjunction with the HOPE for
Homeowners Program will leverage and enhance the effectiveness of each
program, ensure that the full range of federal assistance to affected
homeowners is available quickly, and provide the flexibility that the
Banks and their members need to make the AHP refinancing program
successful. In adopting this approach, the FHFA has consulted with the
FHA. Linking the use of the AHP subsidy to refinancing under the HOPE
for Homeowners Program also would be consistent with the requirement in
section 10(j)(9)(G) of the Bank Act that the AHP rule coordinate AHP
activities with other federal or federally-subsidized affordable
housing activities to the maximum extent possible. See 12 U.S.C.
1430(j)(9)(G). Accordingly, this interim final rule authorizes a Bank,
in its discretion, to temporarily establish a homeownership set-aside
program for the use of AHP direct subsidy by its members to assist in
the refinancing of a household's mortgage loan under the FHA's HOPE for
Homeowners Program.
Section 1201 of the Reform Act requires the Director of the FHFA to
consider the differences between the Banks and the Enterprises in
rulemakings that affect the Banks with respect to the Banks'
cooperative ownership structure, mission of providing liquidity to
members, affordable housing and community development mission, capital
structure,
[[Page 61662]]
and joint and several liability. 12 U.S.C. 4513(f). In preparing the
interim final rule, the Director considered these factors and
determined that the rule is appropriate, particularly because the AHP
regulation implements a statutory provision of the Bank Act that
applies only to the Banks. See 12 U.S.C. 1430(j).
II. Analysis of the Interim Final Rule
A. Relocation of AHP Rule to Part 1291
The interim final rule relocates the AHP rule from part 951 of the
FHFB regulations to part 1291 of the FHFA regulations, and renames the
new part to read ``Federal Home Loan Banks' Affordable Housing
Program''. The rule also renumbers references within the rule to
reflect its new part number.
B. Authority To Establish Mortgage Refinancing Program: Sec.
1291.6(f)(1)
The interim final rule adds a new paragraph (f) under the existing
AHP homeownership set-aside program provisions of Sec. 1291.6 of the
AHP regulation, that authorizes a Bank, in its discretion, to
temporarily establish a homeownership set-aside program for the use of
AHP direct subsidy by its members to assist in the refinancing of a
household's mortgage loan under FHA's HOPE for Homeowners Program. 12
CFR 1291.6(f). As a general proposition, any such new refinancing
program must comply with the existing requirements in Sec. 1291.6,
except for certain specified provisions, as well as with the
requirements of part 1291. Thus, the existing provisions in Sec.
1291.6 governing eligible member applicants, member allocation
criteria, household income eligibility, maximum subsidy per household
limit of $15,000, de minimis cash backs, application approvals, funding
procedures, reservation of subsidies, and progress towards use of the
subsidy, all apply to a Bank's mortgage refinancing program. See 12 CFR
1291.6(b), (c)(1), (c)(2)(i), (c)(3), (c)(9), (d), (e). Similarly, a
Bank's mortgage refinancing program must otherwise meet the
requirements of part 1291, including the monitoring, remedial actions
for member noncompliance, and agreements provisions in Sec. Sec.
1291.7, 1291.8, and 1291.9, respectively, other than the requirement in
Sec. 1291.9(a)(7) for five-year retention agreements in connection
with a household's subsequent sale or refinancing of the unit.
The interim final rule provides that the provisions in Sec. 1291.6
governing household completion of a counseling program, first-time
homebuyer and additional discretionary household eligibility criteria,
eligible uses of AHP subsidy, five-year retention agreements, lender
financial or other concessions, loan financing costs, and counseling
costs requirements, all do not apply to the new refinancing programs.
See 12 CFR 1291.6(c)(2)(ii), (c)(2)(iii), (c)(4)-(c)(8).
C. Funding Allocation: Sec. 1291.2(b)(2)(i)
In order to maximize the Banks' role in responding to the current
national mortgage crisis, the interim final rule allows a Bank to
allocate the maximum permissible homeownership set-aside allocation
entirely to a mortgage refinancing program established under new
paragraph (f). See 12 CFR 1291.2(b)(2)(i). The interim final rule
further provides that if a Bank sets aside funds solely for
homeownership set-aside programs other than a mortgage refinancing
program established under paragraph (f), at least one-third of the
Bank's aggregate annual set-aside allocation to such programs shall be
to assist first-time homebuyers. This is consistent with the current
one-third first-time homebuyers requirement.
D. Eligible Loans: Sec. 1291.6(f)(2)
Under the interim final rule, a loan is eligible to be refinanced
with AHP direct subsidy if the loan is secured by a first mortgage on
an owner-occupied unit that is the primary residence of the household,
and the loan is refinanced under the HOPE for Homeowners Program. 12
CFR 1291.6(f)(2). In order to be refinanced under the HOPE for
Homeowners Program, the loan must meet all applicable underwriting
requirements and other FHA standards for the HOPE for Homeowners
Program. The FHFA believes that these requirements and standards will
provide both adequate protections to borrowers whose loans will be
refinanced and protect the integrity of the AHP. For example, under the
HOPE for Homeowners Program and FHA standards:
The borrower must be unable to afford its existing
mortgage payments; the borrower's mortgage debt-to-income ratio, as of
March 1, 2008, must have been greater than 31 percent, or such higher
amount as the FHA determines appropriate;
The principal amount of the refinanced loan shall not
exceed 90 percent of the currently appraised value of the property;
The refinanced loan must be a fixed-rate, fully
amortizing, 30-year loan;
Prepayment fees must be waived;
All fees and penalties related to default or delinquency
on the original mortgage must be waived or forgiven;
Any outstanding mortgage liens on the property shall be
removed;
Investor-owned properties are not eligible--the borrower
must be an owner-occupant;
The borrower must have verified income based on an IRS tax
return or other equivalent standards;
The borrower may be charged only reasonable and customary
closing costs established by the FHA;
Origination fees are subject to limitation; and
Rates on refinanced mortgages must be commensurate with
market interest rates.
There are other programs that provide refinancing assistance to
distressed borrowers. The Enterprises offer programs that allow for
loan modifications targeted at subprime mortgage borrowers but which do
not require that lenders take an initial write-down based on the
current appraised value. The FHA offers a refinancing option in
addition to the HOPE for Homeowners Program called FHA Secure. Under
FHA Secure, any mortgage payment arrearage on the first loan can be
rolled into a new FHA-insured loan. Further, lenders have the option of
placing a second lien on the property if the borrower owes more than
the property is worth or exceeds the FHA loan limit or to cover
prepayment penalties and arrearages. In addition, state housing finance
agencies are developing their own refinancing programs to assist
distressed homeowners. Because these programs are diverse and emerging,
the FHFA has not analyzed their specific merits.
The FHFA requests comment on whether the rule should authorize the
Banks to use AHP set-aside funds to assist homeowners refinancing under
other programs intended to aid distressed homeowners, such as those
offered by the Enterprises, FHA Secure, or any state housing finance
agency programs. In addition, the FHFA requests comment on how the
standards for these programs will assure the affordability of the
housing costs to the borrower and the sustainability of the refinanced
loan.
E. Eligible Uses of AHP Subsidy: Sec. 1291.6(f)(3)
The interim final rule allows members to provide AHP direct subsidy
for two uses. 12 CFR 1291.6(f)(3). A member may use the subsidy to
reduce the outstanding principal balance of the household's loan below
the maximum loan-to-value ratio required under the HOPE for Homeowners
Program in order to enable the household to meet the applicable
mortgage debt-to-income
[[Page 61663]]
ratio requirements under such Program, i.e., to make the refinanced
loan affordable to the household. This use of the AHP subsidy is
consistent with the current AHP rule, which permits use of the AHP
subsidy to pay for down payment assistance in connection with the
purchase of a home under the homeownership set-aside program. See 12
CFR 1291.6(c)(4). In addition, under the new AHP refinancing authority,
a member may use the AHP subsidy to pay FHA-approved loan closing
costs. This use of AHP subsidy also is consistent with the current AHP
rule, which permits use of the AHP subsidy to pay for closing costs in
connection with the purchase of a home under the homeownership set-
aside program. See 12 CFR 1291.6(c)(4) and (8).
F. Eligible Lender Participants: Sec. 1291.6(f)(4)
Under the interim final rule, a Bank may provide the AHP direct
subsidy to members that are FHA-approved lenders for the purpose of
refinancing an eligible loan with an FHA-insured loan by the member. A
Bank may also, in its discretion, provide the AHP subsidy to members
that will provide the subsidy to FHA-approved lenders that are not
members of the Bank for the purpose of refinancing an eligible loan if,
after consulting with the Bank's Advisory Council, the Bank determines
that such action would be in the best interests of borrowers in the
Bank's district. 12 CFR 1291.6(f)(4). Providing the subsidy to members,
or to members who provide it to nonmembers, is consistent with the
current AHP homeownership set-aside process under which a Bank provides
the AHP subsidy to a member for use in conjunction with making a loan
to a borrower, or to a member that provides the subsidy to another
member or nonmember lender to make an AHP-assisted loan to a borrower.
G. AHP Retention Agreements
The interim final rule does not require five-year retention
agreements as required under the current AHP regulation and, therefore,
does not require repayment of AHP subsidy by a household in the event
of a subsequent sale or refinancing of the unit during the five-year
retention period. See 12 CFR 1291.6(c)(5) and 1291.9(a)(7). The FHFA
has decided not to include this requirement because the HOPE for
Homeowners Program includes a requirement generally that any
appreciation or equity created as a result of a sale or refinancing
during the five-year period must be shared between the FHA, the
borrower, and any subordinate mortgage holder whose lien was
extinguished as part of the refinancing under the Program. See Reform
Act at sec. 1402(a) (National Housing Act sec. 257(e)(4)(B), and (k)).
H. Monitoring: Sec. 1291.7(b)
The interim final rule amends existing Sec. 1291.7(b), which sets
forth the monitoring requirements for homeownership set-aside programs
generally, to make a Bank's mortgage refinancing program subject to
those monitoring requirements. Thus, a Bank's written monitoring
policies for its homeownership set-aside programs must include
requirements for: (i) Determining whether AHP subsidy was provided to
households with incomes at or below 80 percent of the area median
income as required in Sec. 1291.6(c)(2)(i), and all other applicable
eligibility requirements in Sec. 1291.6(c) and (f); (ii) Bank review
of member certifications, prior to disbursement of the AHP subsidy,
that the subsidy will be provided in compliance with all applicable
eligibility requirements in Sec. 1291.6(c) and (f); and (iii) Bank
review of back-up documentation regarding household incomes maintained
by the member, and maintenance and Bank review of other documentation
in the Bank's discretion.
I. Sunset Date: Sec. 1291.6(f)(5)
The interim final rule includes a provision terminating the Banks'
authority to commit AHP subsidy for refinancing after July 30, 2010,
which is the expiration date of the two-year period in section 1218 of
the Reform Act. 12 CFR 1291.6(f)(5). The rule allows lenders to use AHP
subsidy committed by that date to refinance loans that are in the
pipeline. This means that a lender may use the AHP subsidy for a loan
that was submitted to the FHA for approval on or before July 30, 2010
that is approved for refinancing under the HOPE for Homeowners Program
after that date. Title IV of the Reform Act provides that the sunset
date for the HOPE for Homeowners Program is September 30, 2011. See
Reform Act at sec. 1402(a) (National Housing Act sec. 257(r)). In light
of our view that prior to its amendment by the Reform Act, section
10(j) of the Bank Act provided the legal authority for the FHFA to
permit the Banks to use AHP subsidy to pay costs associated with
refinancing existing mortgage loans, see 73 FR at 20553-55, the FHFA
requests comment on whether it should extend the sunset date to be co-
extensive with that of the HOPE for Homeowners Program.
The FHFA invites comments on all aspects of the interim final rule.
III. Notice and Public Participation
The FHFA for good cause finds that the notice and comment procedure
required by the Administrative Procedure Act is impracticable or
contrary to the public interest in this instance. See 5 U.S.C.
553(b)(3)(B). Section 1218 of the Reform Act requires that the FHFA's
regulations authorize the use of AHP subsidy for mortgage refinancing
for a two-year period commencing on July 30, 2008. Issuance of an
interim final rule will enable the Banks to expedite implementation of
AHP mortgage refinancing programs pursuant to section 1218. The delay
that would ensue during a proposed notice and comment rulemaking would
significantly curtail the available period of time for implementation
and operation of AHP mortgage refinancing programs by the Banks.
However, because the FHFA believes that public comments are valuable,
it encourages comments on this interim final rule, and will consider
all comments received on or before December 16, 2008 in promulgating a
final rule.
IV. Effective Date
For the reasons stated in part III above, the FHFA for good cause
finds that the interim final rule should become effective on October
17, 2008. See 5 U.S.C. 553(d)(3).
V. Paperwork Reduction Act
The information collection contained in the current AHP regulation,
entitled ``Affordable Housing Program (AHP),'' has been assigned
control number 3069-0006 by the Office of Management and Budget (OMB).
The interim final rule does not substantively or materially modify the
approved information collection. Consequently, the FHFA has not
submitted any information to OMB for review under the Paperwork
Reduction Act of 1995 (PRA). See 44 U.S.C. 3501 et seq.
VI. Regulatory Flexibility Act
The FHFA is adopting this regulation in the form of an interim
final rule and not as a proposed rule. Therefore, the provisions of the
Regulatory Flexibility Act do not apply. See 5 U.S.C. 601(2) and
603(a).
List of Subjects in 12 CFR Parts 951 and 1291
Community development, Credit, Federal home loan banks, Housing,
Reporting and recordkeeping requirements.
0
For the reasons stated in the preamble, the FHFA hereby amends chapters
IX
[[Page 61664]]
and XII of title 12 of the Code of Federal Regulations as follows:
CHAPTER XII--FEDERAL HOUSING FINANCE AGENCY
0
1. Amend title 12 CFR chapter XII by establishing subchapter E,
consisting of parts 1280 through 1299, to read as follows:
Subchapter E--Housing Goals and Mission
CHAPTER IX--FEDERAL HOUSING FINANCE BOARD
PART 951--AFFORDABLE HOUSING PROGRAM
0
2. Transfer 12 CFR part 951 from chapter IX, subchapter G, to chapter
XII, subchapter E and redesignate as 12 CFR part 1291.
PART 1291--FEDERAL HOME LOAN BANKS' AFFORDABLE HOUSING PROGRAM
0
3. The authority citation for the newly redesignated part 1291
continues to read as follows:
Authority: 12 U.S.C. 1430(j).
0
3A. Revise the heading of newly redesignated part 1291 to read as set
forth above.
0
4. Amend the newly redesignated part 1291 as follows:
----------------------------------------------------------------------------------------------------------------
By removing the reference
Amend: to: And adding in its place:
----------------------------------------------------------------------------------------------------------------
Sec. 1291.1, definition of Sec. 951.1 of this part Sec. 1291.1.
``Affordable''.
Sec. 1291.1, definition of Sec. 951.5 of this part Sec. 1291.5.
``Competitive application
program''.
Sec. 1291.1, definition of Sec. 951.6 of this part Sec. 1291.6.
``Homeownership set-aside
program''.
Sec. 1291.3(a)(1)............... Sec. 951.1 of this part Sec. 1291.1.
Sec. 1291.3(a)(2)............... Sec. 951.5 of this part Sec. 1291.5.
Sec. 1291.3(a)(3)............... Sec. 951.6 of this part Sec. 1291.6.
Sec. 1291.3(a)(4)............... Sec. 951.5(c)(13) of Sec. 1291.5(c)(13).
this part.
Sec. 1291.3(a)(5)............... Sec. 951.5(c)(14) of Sec. 1291.5(c)(14).
this part.
Sec. 1291.3(a)(6)............... Sec. 951.7 of this part Sec. 1291.7.
Sec. 1291.3(a)(7)............... Sec. 951.8(f)(2) of Sec. 1291.8(f)(2).
this part.
Sec. 1291.3(a)(8)............... Sec. 951.9(a)(7) and Sec. 1291.9(a)(7) and (8).
(a)(8) of this part.
Sec. 1291.5(c)(9)(i)............ Sec. 951.9(a)(7) of Sec. 1291.9(a)(7).
this part.
Sec. 1291.5(c)(9)(ii)........... Sec. 951.9(a)(8) of Sec. 1291.9(a)(8).
this part.
Sec. 1291.5(c)(10)(ii).......... Sec. 951.5(c)(13) of paragraph (c)(13) of this section.
this part.
Sec. 1291.5(c)(10)(iii)......... Sec. 951.5(c)(14) of paragraph (c)(14) of this section.
this part.
Sec. 1291.5(c)(13)(iii)(A)...... Sec. Sec. 951.7(a) and Sec. Sec. 1291.7(a) and 1291.9.
951.9 of this part.
Sec. 1291.5(c)(13)(iii)(B)...... Sec. Sec. 951.8 and Sec. Sec. 1291.8 and 1291.9.
951.9 of this part.
Sec. 1291.5(c)(14)(iii)......... Sec. 951.7(a), 951.8, Sec. Sec. 1291.7(a), 1291.8, and 1291.9.
and 951.9, respectively,
of this part.
Sec. 1291.5(c)(16)(i)(A)........ Sec. 951.5(f) of this paragraph (f) of this section.
part.
Sec. 1291.5(g)(6)............... Sec. 951.8(f)(2) of Sec. 1291.8(f)(2).
this part.
Sec. 1291.5(h)(1)(i)............ Sec. 951.3 of this part Sec. 1291.3.
Sec. 1291.5(h)(1)(ii)........... Sec. 951.5(e) of this paragraph (e) of this section.
part.
Sec. 1291.6(c)(2)(iii).......... Sec. 951.2(b)(2) of Sec. 1291.2(b)(2).
this part.
Sec. 1291.6(c)(5)............... Sec. 951.9(a)(7) of Sec. 1291.9(a)(7).
this part.
Sec. 1291.7(a)(1)(i)(C)(4)...... Sec. 951.9(a)(7) or Sec. 1291.9(a)(7) or (8).
(a)(8), respectively, of
this part.
Sec. 1291.7(a)(5)............... Sec. 951.1 of this part Sec. 1291.1.
Sec. 1291.7(b)(1)(i)............ Sec. 951.6(c)(2) of Sec. 1291.6(c)(2).
this part.
Sec. 1291.7(b)(1)(ii)........... Sec. 951.6(c) of this Sec. 1291.6(c).
part.
Sec. 1291.7(b)(1)(ii)........... Sec. 951.6(c)(5) of Sec. 1291.6(c)(5).
this part.
Sec. 1291.7(b)(2)(i)............ Sec. 951.6(c) of this Sec. 1291.6(c).
part.
Sec. 1291.8(c)(2)............... Sec. 951.5(f) of this Sec. 1291.5(f).
part.
Sec. 1291.8(i).................. Sec. 907.9 of this 12 CFR 907.9.
chapter.
Sec. 1291.9(a)(4)(i)............ Sec. 951.8(b)(1) of Sec. 1291.8(b)(1).
this part.
Sec. 1291.9(a)(4)(ii)(A)........ Sec. 951.8(b)(2)(i) or Sec. 1291.8(b)(2)(i) or (ii).
(b)(2)(ii) of this part.
Sec. 1291.9(a)(4)(ii)(B)........ Sec. 951.8(b)(2)(i) of Sec. 1291.8(b)(2)(i).
this part.
Sec. 1291.9(a)(5)(i)............ Sec. 951.7 of this part Sec. 1291.7.
Sec. 1291.9(a)(5)(ii)........... Sec. 951.7 of this part Sec. 1291.7.
Sec. 1291.9(a)(7)(iii)(A)....... Sec. 951.8(f)(2) of Sec. 1291.8(f)(2).
this part.
Sec. 1291.9(a)(7)(iii)(B)....... Sec. 951.8(f)(2)....... Sec. 1291.8(f)(2).
Sec. 1291.9(a)(9)............... Sec. 951.5(c)(13) of Sec. 1291.5(c)(13).
this part.
Sec. 1291.9(b).................. Sec. 951.8(b)(2)(ii) of Sec. 1291.8(b)(2)(ii).
this part.
Sec. 1291.11(a)................. Sec. 951.2(a) of this Sec. 1291.2(a).
part.
Sec. 1291.12(a)................. Sec. 951.2(a) of this Sec. 1291.2(a).
part.
Sec. 1291.12(b)................. Sec. 951.2(a) of this Sec. 1291.2(a).
part.
----------------------------------------------------------------------------------------------------------------
0
5. In newly redesignated part 1291, revise all references to ``Finance
Board'' to read ``FHFA''.
0
6. In newly redesignated Sec. 1291.1, add the following definitions in
alphabetical order:
Sec. 1291.1 Definitions.
* * * * *
Director means the Director of the Federal Housing Finance Agency,
or his or her designate.
* * * * *
FHFA means the Federal Housing Finance Agency.
* * * * *>
0
7. Amend Sec. 1291.2(b)(2)(i) to read as follows:
[[Page 61665]]
Sec. 1291.2 Required annual AHP contributions; allocation of
contributions.
* * * * *
(b) * * *
(2) Homeownership set-aside programs--(i) Allocation amount; first-
time homebuyers. (A) A Bank, in its discretion, may set aside annually,
in the aggregate, up to the greater of $4.5 million or 35 percent of
the Bank's annual required AHP contribution to provide funds to members
participating in homeownership set-aside programs, including a mortgage
refinancing set-aside program established under paragraph (f) of this
section, pursuant to the requirements of this part.
(B) If a Bank sets aside funds solely for homeownership set-aside
programs other than a mortgage refinancing program established under
paragraph (f) of this section, at least one-third of the Bank's
aggregate annual set-aside allocation to such programs shall be to
assist first-time homebuyers.
* * * * *
0
8. Amend Sec. 1291.6 by adding paragraph (f) to read as follows:
Sec. 1291.6 Homeownership set-aside programs.
* * * * *
(f) Mortgage refinancing program--(1) General. A Bank may establish
a homeownership set-aside program for the use of AHP direct subsidy by
its members to assist in the refinancing of a household's mortgage
loan, provided such program meets the requirements of this paragraph
(f) and otherwise meets the requirements of part 1291. The provisions
of paragraphs (c)(2)(ii), (c)(2)(iii), and (c)(4) through (c)(8) of
this section, shall not apply to such program.
(2) Eligible loans. A loan is eligible to be refinanced with AHP
direct subsidy if the loan is secured by a first mortgage on an owner-
occupied unit that is the primary residence of the household, and the
loan is refinanced under the Federal Housing Administration's (FHA)
HOPE for Homeowners Program established pursuant to Title IV of the
Housing and Economic Recovery Act of 2008 and thereby meets all
applicable underwriting requirements and other standards under Title II
of the National Housing Act, as amended by Title IV (12 U.S.C. 1707 et
seq.).
(3) Eligible uses of AHP direct subsidy. Members may provide the
AHP direct subsidy to:
(i) Reduce the outstanding principal balance of the loan below the
maximum loan-to-value ratio required under the HOPE for Homeowners
Program in order to make the refinanced loan affordable to the
household by enabling the household to meet the HOPE for Homeowners
Program's debt-to-income standards for a low-or moderate-income
household; or
(ii) Pay FHA-approved loan closing costs.
(4) Eligible lender participants. A Bank may provide the AHP direct
subsidy to members that are FHA-approved lenders for the purpose of
refinancing an eligible loan with an FHA-insured loan by the member,
or, in the Bank's discretion, to members that provide the subsidy to
FHA-approved lenders that are not members of the Bank for the purpose
of refinancing an eligible loan if, after consulting with the Bank's
Advisory Council, the Bank determines that such action would be in the
best interests of borrowers in the Bank's district.
(5) Sunset. (i) This paragraph (f) shall expire on July 30, 2010,
and a Bank may not commit AHP subsidy to households under its
refinancing program after such date.
(ii) A lender may use the AHP subsidy committed by such date for a
loan submitted to the FHA for approval on or before July 30, 2010 that
is approved for refinancing under the HOPE for Homeowners Program after
such date.
0
9. Amend Sec. 1291.7 by:
0
a. In paragraph (b)(1)(ii), adding ``and Sec. 1291.6(f)'' after
``Sec. 1291.6(c)''; and
0
b. In paragraph (b)(2)(i), adding ``and Sec. 1291.6(f)'' after ``Sec.
1291.6(c)''.
0
10. In newly redesignated Sec. 1291.11, revise all references to
``Board of Directors'' to read ``Director''.
Dated: October 7, 2008.
James B. Lockhart III,
Director, Federal Housing Finance Agency.
[FR Doc. E8-24320 Filed 10-16-08; 8:45 am]
BILLING CODE 8070-01-P
